Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Adtalem Global Education Inc. | tv509119_8-k.htm |
EXHIBIT 99.1
Pro Forma Financial Information
The following supplemental pro forma information is presented for information purposes only, to provide an understanding of Adtalem’s historical financial results as adjusted for the sales of DeVry University and Carrington College. These pro forma financial statements should not be considered a substitute for the actual historical financial information prepared in accordance with generally accepted accounting principles, as presented in Adtalem’s filings on Form 10-K and Form 10-Q. The unaudited pro forma consolidated financial information disclosed in this report is for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the pro forma events taken place on the dates indicated, or our future consolidated results of operations.
The Pro Forma Consolidated Balance Sheets as of June 30, 2018 and September 30, 2018 presents our consolidated financial position giving pro forma effect to the dispositions of DeVry University and Carrington College as if they had occurred on June 30, 2018. The Pro Forma Consolidated Statements of Income for the year ended June 30, 2018 and three months ended September 30, 2018 presents our consolidated results of operations giving pro forma effect to the dispositions of DeVry University and Carrington College as if they had occurred on July 1, 2017 and July 1, 2018, respectively. These pro forma financial statements should be read in connection with Adtalem’s historical consolidated financial statements, which were included in the Annual Report on Form 10-K for the year ended June 30, 2018, filed on August 24, 2018 and Quarterly Report on Form 10-Q for the three months ended September 30, 2018, filed on November 1, 2018.
The pro forma adjustments are based on currently available information, estimates and assumptions that Adtalem believes are reasonable in order to reflect, on a pro forma basis, the impact of these dispositions on our historical information.
| ADTALEM GLOBAL EDUCATION INC. |
| PRO FORMA CONSOLIDATED BALANCE SHEET |
| (unaudited and amounts in thousands, except share and par value amounts) |
| June 30, 2018 | |||||||||||||
| Adtalem | Pro Forma | Adtalem | |||||||||||
| Historical | Adjustments | Pro Forma | |||||||||||
| ASSETS: | |||||||||||||
| Current Assets: | |||||||||||||
| Cash and Cash Equivalents | $ | 430,690 | $ | (31,900 | ) | (a) | $ | 398,790 | |||||
| Marketable Securities and Investments | 4,255 | - | 4,255 | ||||||||||
| Restricted Cash | 310 | - | 310 | ||||||||||
| Accounts Receivable, Net | 146,726 | - | 146,726 | ||||||||||
| Prepaid Expenses and Other Current Assets | 58,887 | - | 58,887 | ||||||||||
| Current Assets Held for Sale | 47,132 | (47,132 | ) | (b) | - | ||||||||
| Total Current Assets | 688,000 | (79,032 | ) | 608,968 | |||||||||
| Land, Building and Equipment: | |||||||||||||
| Land | 48,177 | - | 48,177 | ||||||||||
| Building | 389,129 | - | 389,129 | ||||||||||
| Equipment | 302,516 | - | 302,516 | ||||||||||
| Construction in Progress | 25,360 | - | 25,360 | ||||||||||
| 765,182 | - | 765,182 | |||||||||||
| Accumulated Depreciation | (376,528 | ) | - | (376,528 | ) | ||||||||
| Land, Building and Equipment Held for Sale, Net | - | - | - | ||||||||||
| Land, Building and Equipment, Net | 388,654 | - | 388,654 | ||||||||||
| Noncurrent Assets: | |||||||||||||
| Deferred Income Taxes | 38,780 | - | 38,780 | ||||||||||
| Intangible Assets, Net | 362,931 | - | 362,931 | ||||||||||
| Goodwill | 813,887 | - | 813,887 | ||||||||||
| Other Assets, Net | 39,259 | - | 39,259 | ||||||||||
| Noncurrent Assets Held for Sale | 13,450 | (13,450 | ) | (b) | - | ||||||||
| Total Noncurrent Assets | 1,268,307 | (13,450 | ) | 1,254,857 | |||||||||
| TOTAL ASSETS | $ | 2,344,961 | $ | (92,482 | ) | $ | 2,252,479 | ||||||
| LIABILITIES: | |||||||||||||
| Current Liabilities: | |||||||||||||
| Accounts Payable | $ | 47,477 | $ | - | $ | 47,477 | |||||||
| Accrued Salaries, Wages and Benefits | 71,289 | - | 71,289 | ||||||||||
| Accrued Liabilities | 80,803 | (1,827 | ) | (c) | 78,976 | ||||||||
| Deferred Revenue | 106,773 | - | 106,773 | ||||||||||
| Current Portion of Long-Term Debt | 3,000 | - | 3,000 | ||||||||||
| Current Liabilities Held for Sale | 56,439 | (56,439 | ) | (b) | - | ||||||||
| Total Current Liabilities | 365,781 | (58,266 | ) | 307,515 | |||||||||
| Noncurrent Liabilities: | |||||||||||||
| Long-Term Debt | 290,073 | - | 290,073 | ||||||||||
| Deferred Income Taxes | 29,115 | - | 29,115 | ||||||||||
| Other Liabilities | 131,380 | (3,677 | ) | (c) | 127,703 | ||||||||
| Noncurrent Liabilities Held for Sale | 216 | (216 | ) | (b) | - | ||||||||
| Total Noncurrent Liabilities | 450,784 | (3,893 | ) | 446,891 | |||||||||
| TOTAL LIABILITIES | 816,565 | (62,159 | ) | 754,406 | |||||||||
| COMMITMENTS AND CONTINGENCIES | |||||||||||||
| NONCONTROLLING INTEREST | 9,110 | - | 9,110 | ||||||||||
| SHAREHOLDERS' EQUITY: | |||||||||||||
| Common Stock, $0.01 Par Value | 793 | - | 793 | ||||||||||
| Additional Paid-in Capital | 454,653 | - | 454,653 | ||||||||||
| Retained Earnings | 1,917,373 | (30,323 | ) | (d) | 1,887,050 | ||||||||
| Accumulated Other Comprehensive Loss | (142,168 | ) | - | (142,168 | ) | ||||||||
| Treasury Stock, at Cost | (711,365 | ) | - | (711,365 | ) | ||||||||
| TOTAL SHAREHOLDERS' EQUITY | 1,519,286 | (30,323 | ) | 1,488,963 | |||||||||
| TOTAL LIABILITIES, NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY | $ | 2,344,961 | $ | (92,482 | ) | $ | 2,252,479 | ||||||
| ADTALEM GLOBAL EDUCATION INC. |
| PRO FORMA CONSOLIDATED STATEMENT OF INCOME |
| (unaudited and amounts in thousands, except per share amounts) |
| Year Ended June 30, 2018 | |||||||||||||
| Adtalem | Pro Forma | Adtalem | |||||||||||
| Historical | Adjustments | Pro Forma | |||||||||||
| REVENUE | $ | 1,231,211 | $ | - | $ | 1,231,211 | |||||||
| OPERATING COST AND EXPENSE: | |||||||||||||
| Cost of Educational Services | 645,604 | - | 645,604 | ||||||||||
| Student Services and Administrative Expense | 373,064 | - | 373,064 | ||||||||||
| Restructuring Expense | 5,067 | - | 5,067 | ||||||||||
| Total Operating Cost and Expense | 1,023,735 | - | 1,023,735 | ||||||||||
| Operating Income from Continuing Operations | 207,476 | - | 207,476 | ||||||||||
| INTEREST: | |||||||||||||
| Interest Income | 5,827 | - | 5,827 | ||||||||||
| Interest Expense | (14,620 | ) | - | (14,620 | ) | ||||||||
| Net Interest Expense | (8,793 | ) | - | (8,793 | ) | ||||||||
| Income from Continuing Operations Before Income Taxes | 198,683 | - | 198,683 | ||||||||||
| Income Tax Provision | (84,102 | ) | - | (84,102 | ) | ||||||||
| Equity Method Investment Loss | (138 | ) | - | (138 | ) | ||||||||
| Income from Continuing Operations | 114,443 | - | 114,443 | ||||||||||
| DISCONTINUED OPERATIONS: | |||||||||||||
| Loss from Discontinued Operations Before Income Taxes | (124,162 | ) | 124,162 | (b) | - | ||||||||
| Income Tax Benefit | 44,016 | (44,016 | ) | (b) | - | ||||||||
| Loss from Discontinued Operations | (80,146 | ) | 80,146 | - | |||||||||
| NET INCOME | 34,297 | 80,146 | 114,443 | ||||||||||
| Net Income Attributable to Noncontrolling Interest | (528 | ) | - | (528 | ) | ||||||||
| NET INCOME ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION | $ | 33,769 | $ | 80,146 | $ | 113,915 | |||||||
| AMOUNTS ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION: | |||||||||||||
| Income from Continuing Operations | $ | 113,915 | $ | - | $ | 113,915 | |||||||
| Loss from Discontinued Operations | (80,146 | ) | 80,146 | - | |||||||||
| NET INCOME ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION | $ | 33,769 | $ | 80,146 | $ | 113,915 | |||||||
| EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO | |||||||||||||
| ADTALEM GLOBAL EDUCATION SHAREHOLDERS: | |||||||||||||
| Basic: | |||||||||||||
| Continuing Operations | $ | 1.85 | $ | - | $ | 1.85 | |||||||
| Discontinued Operations | $ | (1.30 | ) | $ | 1.30 | $ | - | ||||||
| Total | $ | 0.55 | $ | 1.30 | $ | 1.85 | |||||||
| Diluted: | |||||||||||||
| Continuing Operations | $ | 1.83 | $ | - | $ | 1.83 | |||||||
| Discontinued Operations | $ | (1.29 | ) | $ | 1.29 | $ | - | ||||||
| Total | $ | 0.54 | $ | 1.29 | $ | 1.83 | |||||||
| Notes to June 30, 2018 Pro Forma Consolidated Financial Information | ||
| (a) | Represents $21.3 million of cash transferred to provide a working capital balance of $7.5 million, $1.25 million for Incentive Assurance Payments, as defined in the Stock Purchase Agreement, related to the delayed sale closing and transaction costs of $2.3 million to be paid by Adtalem related to the sale of DeVry University. In addition, represents $10.6 million of cash transferred to provide a working capital balance of $11.5 million related to the sale of Carrington College. | |
| (b) | Represents the elimination of the assets, liabilities and operating results associated with the businesses disposition. As of June 30, 2018, DeVry University's and Carrington College's assets and liabilities were classified as held for sale on Adtalem's Consolidated Balance Sheet and DeVry University's and Carrington College's results of operations were classified as discontinued operations in Adtalem's Consolidated Statement of Income, each in the Form 10-K filed on August 24, 2018. | |
| (c) | Represents the deferred rent liabilities associated with DeVry University and Carrington College leases as of June 30, 2018, which will be assumed by the respective Buyers, and removed from Adtalem's liability balances. | |
| (d) | Represents the estimated loss realized on the sale of DeVry University and Carrington College had the transactions closed on June 30, 2018. These amounts are subject to finalization. This estimated loss is not included in the adjustments in the pro forma consolidated statement of income, as this amount will be included as discontinued operations in the consolidated statement of income of Adtalem following the disposition. | |
| ADTALEM GLOBAL EDUCATION INC. |
| PRO FORMA CONSOLIDATED BALANCE SHEET |
| (unaudited and amounts in thousands, except share and par value amounts) |
| September 30, 2018 | |||||||||||||
| Adtalem | Pro Forma | Adtalem | |||||||||||
| Historical | Adjustments | Pro Forma | |||||||||||
| ASSETS: | |||||||||||||
| Current Assets: | |||||||||||||
| Cash and Cash Equivalents | $ | 408,765 | $ | (21,949 | ) | (a) | $ | 386,816 | |||||
| Marketable Securities and Investments | 8,402 | - | 8,402 | ||||||||||
| Restricted Cash | 877 | - | 877 | ||||||||||
| Accounts Receivable, Net | 166,794 | - | 166,794 | ||||||||||
| Prepaid Expenses and Other Current Assets | 69,714 | - | 69,714 | ||||||||||
| Current Assets Held for Sale | 84,834 | (84,834 | ) | (b) | - | ||||||||
| Total Current Assets | 739,386 | (106,783 | ) | 632,603 | |||||||||
| Land, Building and Equipment: | |||||||||||||
| Land | 43,724 | - | 43,724 | ||||||||||
| Building | 349,694 | - | 349,694 | ||||||||||
| Equipment | 269,298 | - | 269,298 | ||||||||||
| Construction in Progress | 26,849 | - | 26,849 | ||||||||||
| 689,565 | - | 689,565 | |||||||||||
| Accumulated Depreciation | (338,162 | ) | - | (338,162 | ) | ||||||||
| Land, Building and Equipment Held for Sale, Net | - | - | - | ||||||||||
| Land, Building and Equipment, Net | 351,403 | - | 351,403 | ||||||||||
| Noncurrent Assets: | |||||||||||||
| Deferred Income Taxes | 31,080 | - | 31,080 | ||||||||||
| Intangible Assets, Net | 355,595 | - | 355,595 | ||||||||||
| Goodwill | 805,285 | - | 805,285 | ||||||||||
| Other Assets, Net | 53,666 | - | 53,666 | ||||||||||
| Noncurrent Assets Held for Sale | 13,450 | (13,450 | ) | (b) | - | ||||||||
| Total Noncurrent Assets | 1,259,076 | (13,450 | ) | 1,245,626 | |||||||||
| TOTAL ASSETS | $ | 2,349,865 | $ | (120,233 | ) | $ | 2,229,632 | ||||||
| LIABILITIES: | |||||||||||||
| Current Liabilities: | |||||||||||||
| Accounts Payable | $ | 50,413 | $ | - | $ | 50,413 | |||||||
| Accrued Salaries, Wages and Benefits | 46,255 | - | 46,255 | ||||||||||
| Accrued Liabilities | 90,167 | (1,799 | ) | (c) | 88,368 | ||||||||
| Deferred Revenue | 185,061 | - | 185,061 | ||||||||||
| Current Portion of Long-Term Debt | 3,000 | - | 3,000 | ||||||||||
| Current Liabilities Held for Sale | 84,190 | (84,190 | ) | (b) | - | ||||||||
| Total Current Liabilities | 459,086 | (85,989 | ) | 373,097 | |||||||||
| Noncurrent Liabilities: | |||||||||||||
| Long-Term Debt | 289,579 | - | 289,579 | ||||||||||
| Deferred Income Taxes | 29,378 | - | 29,378 | ||||||||||
| Other Liabilities | 122,757 | (3,205 | ) | (c) | 119,552 | ||||||||
| Noncurrent Liabilities Held for Sale | 216 | (216 | ) | (b) | - | ||||||||
| Total Noncurrent Liabilities | 441,930 | (3,421 | ) | 438,509 | |||||||||
| TOTAL LIABILITIES | 901,016 | (89,410 | ) | 811,606 | |||||||||
| COMMITMENTS AND CONTINGENCIES | |||||||||||||
| NONCONTROLLING INTEREST | 8,814 | - | 8,814 | ||||||||||
| SHAREHOLDERS' EQUITY: | |||||||||||||
| Common Stock, $0.01 Par Value | 798 | - | 798 | ||||||||||
| Additional Paid-in Capital | 469,545 | - | 469,545 | ||||||||||
| Retained Earnings | 1,908,465 | (30,823 | ) | (d) | 1,877,642 | ||||||||
| Accumulated Other Comprehensive Loss | (163,168 | ) | - | (163,168 | ) | ||||||||
| Treasury Stock, at Cost | (775,605 | ) | - | (775,605 | ) | ||||||||
| TOTAL SHAREHOLDERS' EQUITY | 1,440,035 | (30,823 | ) | 1,409,212 | |||||||||
| TOTAL LIABILITIES, NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY | $ | 2,349,865 | $ | (120,233 | ) | $ | 2,229,632 | ||||||
| ADTALEM GLOBAL EDUCATION INC. |
| PRO FORMA CONSOLIDATED STATEMENT OF INCOME |
| (unaudited and amounts in thousands, except per share amounts) |
| Three Months Ended September 30, 2018 | |||||||||||||
| Adtalem | Pro Forma | Adtalem | |||||||||||
| Historical | Adjustments | Pro Forma | |||||||||||
| REVENUE | $ | 284,190 | $ | - | $ | 284,190 | |||||||
| OPERATING COST AND EXPENSE: | |||||||||||||
| Cost of Educational Services | 148,653 | - | 148,653 | ||||||||||
| Student Services and Administrative Expense | 98,497 | - | 98,497 | ||||||||||
| Restructuring Expense | 39,548 | - | 39,548 | ||||||||||
| Total Operating Cost and Expense | 286,698 | - | 286,698 | ||||||||||
| Operating Income from Continuing Operations | (2,508 | ) | - | (2,508 | ) | ||||||||
| INTEREST: | |||||||||||||
| Interest Income | 1,945 | - | 1,945 | ||||||||||
| Interest Expense | (6,202 | ) | - | (6,202 | ) | ||||||||
| Net Interest Expense | (4,257 | ) | - | (4,257 | ) | ||||||||
| Loss from Continuing Operations Before Income Taxes | (6,765 | ) | - | (6,765 | ) | ||||||||
| Income Tax Benefit | 1,887 | - | 1,887 | ||||||||||
| Loss from Continuing Operations | (4,878 | ) | - | (4,878 | ) | ||||||||
| DISCONTINUED OPERATIONS: | |||||||||||||
| Loss from Discontinued Operations Before Income Taxes | (6,135 | ) | 6,135 | (b) | - | ||||||||
| Income Tax Benefit | 1,428 | (1,428 | ) | (b) | - | ||||||||
| Loss from Discontinued Operations | (4,707 | ) | 4,707 | - | |||||||||
| NET LOSS | (9,585 | ) | 4,707 | (4,878 | ) | ||||||||
| Net Loss Attributable to Noncontrolling Interest | 55 | - | 55 | ||||||||||
| NET LOSS ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION | $ | (9,530 | ) | $ | 4,707 | $ | (4,823 | ) | |||||
| AMOUNTS ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION: | |||||||||||||
| Loss from Continuing Operations | $ | (4,823 | ) | $ | - | $ | (4,823 | ) | |||||
| Loss from Discontinued Operations | (4,707 | ) | 4,707 | - | |||||||||
| NET LOSS ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION | $ | (9,530 | ) | $ | 4,707 | $ | (4,823 | ) | |||||
| EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO | |||||||||||||
| ADTALEM GLOBAL EDUCATION SHAREHOLDERS: | |||||||||||||
| Basic: | |||||||||||||
| Continuing Operations | $ | (0.08 | ) | $ | - | $ | (0.08 | ) | |||||
| Discontinued Operations | $ | (0.08 | ) | $ | 0.08 | $ | - | ||||||
| Total | $ | (0.16 | ) | $ | 0.08 | $ | (0.08 | ) | |||||
| Diluted: | |||||||||||||
| Continuing Operations | $ | (0.08 | ) | $ | - | $ | (0.08 | ) | |||||
| Discontinued Operations | $ | (0.08 | ) | $ | 0.08 | $ | - | ||||||
| Total | $ | (0.16 | ) | $ | 0.08 | $ | (0.08 | ) | |||||
| Notes to September 30, 2018 Pro Forma Consolidated Financial Information | ||
| (a) | Represents $10.9 million of cash transferred to provide a working capital balance of $7.5 million, $1.25 milllion for Incentive Assurance Payments, as defined in the Stock Purchase Agreement, related to the delayed sale closing and transaction costs of $2.3 million to be paid by Adtalem related to the sale of DeVry University. In addition, represents $11.0 million of cash transferred to provide a working capital balance of $11.5 million related to the sale of Carrington College. | |
| (b) | Represents the elimination of the assets, liabilities and operating results associated with the businesses disposition. As of September 30, 2018, DeVry University's and Carrington College's assets and liabilities were classified as held for sale on Adtalem's Consolidated Balance Sheet and DeVry University's and Carrington College's results of operations were classified as discontinued operations in Adtalem's Consolidated Statement of Income, each in the Form 10-Q filed on November 1, 2018. | |
| (c) | Represents the deferred rent liabilities associated with DeVry University and Carrington College leases as of September 30, 2018, which will be assumed by the respective Buyers, and removed from Adtalem's liability balances. | |
| (d) | Represents the estimated loss realized on the sale of DeVry University and Carrington College had the transaction closed on September 30, 2018. These amounts are subject to finalization. This estimated loss is not included in the adjustments in the pro forma consolidated statement of income, as this amount will be included as discontinued operations in the consolidated statement of income of Adtalem following the disposition. | |